Cloud Computing:

Additional Opportunities and Savings Need to Be Pursued

GAO-14-753: Published: Sep 25, 2014. Publicly Released: Sep 25, 2014.

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What GAO Found

Each of the seven agencies reviewed implemented additional cloud computing services since GAO last reported on their progress in 2012. For example, since then, the total number of cloud computing services implemented by the agencies increased by 80 services, from 21 to 101. The agencies also added to the amount they reported spending on cloud services by $222 million, from $307 million to $529 million. Further, the agencies increased the percentage of their information technology (IT) budgets allocated to cloud services; however, as shown in the table, the overall increase was just 1 percent.

Amount Agencies Allocated to Cloud Services (for Fiscal Years 2012 and 2014)

Department/Agency

Percent of IT budget reported spent on cloud in 2012

Percent budgeted for cloud in 2014

Agriculture

1

3

General Services Administration

2

5

Health and Human Services

0

1

Homeland Security

1

2

Small Business Administration

0

3

State

1

2

Treasury

5

6

Total

1

2

Source: GAO analysis of agency data. l GAO-14-753

The agencies' relatively small increase in cloud spending as a percent of their overall IT budgets, is attributed in part, to the fact that these agencies collectively had not considered cloud computing services for about 67 percent of their investments. With regard to why these investments had not been assessed, the agencies said it was in large part due to these being legacy investments in operations and maintenance; the agencies had only planned to consider cloud options for these investments when they were to be modernized or replaced. This is inconsistent with Office of Management and Budget policy that calls for cloud solutions to be considered first whenever a secure, reliable, and cost-effective option exists regardless of where the investment is in its life cycle. Until the agencies fully assess all their IT investments, they will not be able to achieve the resulting benefits of operational efficiencies and cost savings.

The agencies collectively reported cost savings of about $96 million from the implementation of 22 of the 101 cloud services. These savings included both one-time and multiyear savings. For example, the General Services Administration saved $2.6 million by migrating to a cloud customer service solution, and Homeland Security saved $1.2 million from fiscal years 2011 through 2013 by implementing a cloud-based collaboration service. Agency officials cited two major reasons for why the other services they had implemented did not save money. First, a motivation for changing to some of the cloud-based services was not to reduce spending, but to improve service. Second, in selected cases, the cloud computing service opened up a new service or provided a higher quality of service; while this provided useful benefits to the agency, the associated costs negated any savings.

Why GAO Did This Study

Cloud computing is a relatively new process for acquiring and delivering computing services via information technology (IT) networks. Specifically, it is a means for enabling on-demand access to shared and scalable pools of computing resources with the goal of minimizing management effort and service provider interaction. To encourage federal agencies to pursue the potential efficiencies associated with cloud computing, the Office of Management and Budget (OMB) issued a “Cloud First” policy in 2011 that required agency Chief Information Officers to implement a cloud-based service whenever there was a secure, reliable, and cost-effective option.

GAO was asked to assess agencies' progress in implementing cloud services. GAO's objectives included assessing selected agencies' progress in using such services and determining the extent to which the agencies have experienced cost savings. GAO selected for review the seven agencies that it reported on in 2012 in order to compare their progress since then in implementing cloud services; the agencies were selected using the size of their IT budgets and experience in using cloud services. GAO also analyzed agency cost savings and related documentation and interviewed agency and OMB officials.

What GAO Recommends

GAO is recommending, among other things, that the seven agencies assess the IT investments identified in this report that have yet to be evaluated for suitability for cloud computing services. Of the seven agencies, six agreed with GAO's recommendations, and one had no comments.

For more information, contact David Powner at (202) 512-9286 or pownerd@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to our recommendation, in November 2014, DHS established criteria for evaluating investments for cloud computing service alternatives, and updated its capital planning and investment control guidance to include requirements for completing this evaluation. Further, DHS established a work plan to review individual systems that comprise each investment for suitability to cloud. As a result, DHS provided us evidence that in August 2016 it had assessed all its fiscal year 2016 IT investments for suitability for migration to a cloud computing service.

    Recommendation: To help ensure continued progress in the implementation of cloud computing services, the Secretaries of Agriculture, Health and Human Services, Homeland Security, State, and the Treasury; and the Administrators of the General Services Administration and Small Business Administration should direct their respective Chief Information Officers to ensure that all IT investments are assessed for suitability for migration to a cloud computing service.

    Agency Affected: Department of Homeland Security

  2. Status: Open

    Comments: We are in the process of reviewing agency documentation and waiting for additional supporting documentation.

    Recommendation: To help ensure continued progress in the implementation of cloud computing services, the Secretaries of Agriculture, Health and Human Services, Homeland Security, State, and the Treasury; and the Administrators of the General Services Administration and Small Business Administration should direct their respective Chief Information Officers to ensure that all IT investments are assessed for suitability for migration to a cloud computing service.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Implemented

    Comments: In response to our recommendation, in June 2015, HHS established a requirement for evaluating investments for cloud computing service alternatives, including a strategy and timeline for implementing it. Further, HHS requires that a justification be included when cloud was not chosen or no review was planned. As a result, in November 2016, HHS provided us evidence that it has assessed all their fiscal year 2016 IT investments for suitability for migration to a cloud computing service.

    Recommendation: To help ensure continued progress in the implementation of cloud computing services, the Secretaries of Agriculture, Health and Human Services, Homeland Security, State, and the Treasury; and the Administrators of the General Services Administration and Small Business Administration should direct their respective Chief Information Officers to ensure that all IT investments are assessed for suitability for migration to a cloud computing service.

    Agency Affected: Department of Health and Human Services

  4. Status: Open

    Comments: We contacted the agency and are awaiting its response on the status of efforts to implement this recommendation.

    Recommendation: To help ensure continued progress in the implementation of cloud computing services, the Secretaries of Agriculture, Health and Human Services, Homeland Security, State, and the Treasury; and the Administrators of the General Services Administration and Small Business Administration should direct their respective Chief Information Officers to ensure that all IT investments are assessed for suitability for migration to a cloud computing service.

    Agency Affected: Department of the Treasury

  5. Status: Open

    Comments: The Department of State established a requirement for completing a cloud computing service alternatives analysis for all new projects, and that existing IT projects be evaluated for the viability to migrate to a cloud computing environment. Further, the department established key factors for consideration when selecting applications for migration to a cloud environment. However, State has not yet evaluated a majority of its IT investments for cloud alternatives. The department said it plans to complete evaluations for some of these investments by the end of FY2017, but has not yet established plans to evaluate over a third of its investments.

    Recommendation: To help ensure continued progress in the implementation of cloud computing services, the Secretaries of Agriculture, Health and Human Services, Homeland Security, State, and the Treasury; and the Administrators of the General Services Administration and Small Business Administration should direct their respective Chief Information Officers to ensure that all IT investments are assessed for suitability for migration to a cloud computing service.

    Agency Affected: Department of State

  6. Status: Closed - Implemented

    Comments: In response to our recommendation, GSA established criteria for evaluating investments for cloud computing service alternatives, and updated its capital planning and investment control guidance to include requirements for completing this evaluation. Further, GSA established a work plan to evaluate the suitability of migrating GSA?s information technology systems and applications to cloud-based solutions. As a result, GSA has assessed all their fiscal year 2016 IT investments for suitability for migration to a cloud computing service.

    Recommendation: To help ensure continued progress in the implementation of cloud computing services, the Secretaries of Agriculture, Health and Human Services, Homeland Security, State, and the Treasury; and the Administrators of the General Services Administration and Small Business Administration should direct their respective Chief Information Officers to ensure that all IT investments are assessed for suitability for migration to a cloud computing service.

    Agency Affected: General Services Administration

  7. Status: Open

    Comments: We are waiting for a response from SBA on the status of efforts to implement this recommendation.

    Recommendation: To help ensure continued progress in the implementation of cloud computing services, the Secretaries of Agriculture, Health and Human Services, Homeland Security, State, and the Treasury; and the Administrators of the General Services Administration and Small Business Administration should direct their respective Chief Information Officers to ensure that all IT investments are assessed for suitability for migration to a cloud computing service.

    Agency Affected: Small Business Administration

  8. Status: Closed - Implemented

    Comments: In response to our recommendation, in November 2014, DHS established a work plan and evaluation dates for assessing investments for suitability for migration to a cloud computing service. As a result, DHS provided us evidence that in August 2016 it had completed its assessments and reported all their fiscal year 2016 IT investments had been assessed for suitability for migration to a cloud computing service.

    Recommendation: To help ensure continued progress in the implementation of cloud computing services, the Secretaries of Agriculture, Health and Human Services, Homeland Security, State, and the Treasury; and the Administrators of the General Services Administration and Small Business Administration should direct their respective Chief Information Officers to establish evaluation dates for those investments identified in this report that have not been assessed for migration to the cloud.

    Agency Affected: Department of Homeland Security

  9. Status: Open

    Comments: We are in the process of waiting for additional department documentation.

    Recommendation: To help ensure continued progress in the implementation of cloud computing services, the Secretaries of Agriculture, Health and Human Services, Homeland Security, State, and the Treasury; and the Administrators of the General Services Administration and Small Business Administration should direct their respective Chief Information Officers to establish evaluation dates for those investments identified in this report that have not been assessed for migration to the cloud.

    Agency Affected: Department of Agriculture

  10. Status: Closed - Implemented

    Comments: In response to our recommendation, in June 2015, HHS established a requirement to update each investment?s cloud alternative strategy as part of its fiscal year-end budget data reporting. This included the requirement that each investment in its IT portfolio establish evaluation dates for implementing a cloud alternative, and a justification for why a cloud alternative was not chosen or no review planned. As a result, HHS provided us evidence in November 2016 that it has assessed all their fiscal year 2016 IT investments for suitability for migration to a cloud computing service.

    Recommendation: To help ensure continued progress in the implementation of cloud computing services, the Secretaries of Agriculture, Health and Human Services, Homeland Security, State, and the Treasury; and the Administrators of the General Services Administration and Small Business Administration should direct their respective Chief Information Officers to establish evaluation dates for those investments identified in this report that have not been assessed for migration to the cloud.

    Agency Affected: Department of Health and Human Services

  11. Status: Open

    Comments: We are waiting for a response from the department on the status of efforts to implement this recommendation.

    Recommendation: To help ensure continued progress in the implementation of cloud computing services, the Secretaries of Agriculture, Health and Human Services, Homeland Security, State, and the Treasury; and the Administrators of the General Services Administration and Small Business Administration should direct their respective Chief Information Officers to establish evaluation dates for those investments identified in this report that have not been assessed for migration to the cloud.

    Agency Affected: Department of the Treasury

  12. Status: Open

    Comments: The Department of State established a requirement for completing a cloud computing service alternatives analysis for all new projects, and that existing IT projects be evaluated for viability to migrate to a cloud computing environment. Further, the department established key factors for consideration when selecting applications for migration to a cloud environment. However, the department has not yet established evaluation dates for the vast majority of the investments that have not been assessed for migration to the cloud. Specifically, the department plans to complete evaluations for some of these investments by the end of fiscal year 2017, but does not plan to do so for most of them.

    Recommendation: To help ensure continued progress in the implementation of cloud computing services, the Secretaries of Agriculture, Health and Human Services, Homeland Security, State, and the Treasury; and the Administrators of the General Services Administration and Small Business Administration should direct their respective Chief Information Officers to establish evaluation dates for those investments identified in this report that have not been assessed for migration to the cloud.

    Agency Affected: Department of State

  13. Status: Closed - Implemented

    Comments: In response to our recommendation, GSA established a work plan, and evaluation dates for assessing investments for suitability for migration to a cloud computing service. As a result, GSA has assessed all their fiscal year 2016 IT investments for suitability for migration to a cloud computing service.

    Recommendation: To help ensure continued progress in the implementation of cloud computing services, the Secretaries of Agriculture, Health and Human Services, Homeland Security, State, and the Treasury; and the Administrators of the General Services Administration and Small Business Administration should direct their respective Chief Information Officers to establish evaluation dates for those investments identified in this report that have not been assessed for migration to the cloud.

    Agency Affected: General Services Administration

  14. Status: Open

    Comments: We are waiting for a response from the department on the status of efforts to implement this recommendation.

    Recommendation: To help ensure continued progress in the implementation of cloud computing services, the Secretaries of Agriculture, Health and Human Services, Homeland Security, State, and the Treasury; and the Administrators of the General Services Administration and Small Business Administration should direct their respective Chief Information Officers to establish evaluation dates for those investments identified in this report that have not been assessed for migration to the cloud.

    Agency Affected: Small Business Administration

 

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